Services of general economic interest (SGEIs) involving large network industries – telecommunications, electricity, gas, transport and postal services – are all regulated by sector-specific legislation. Regulations and directives lay down the principles and conditions for operating these particular services in the EU.
The European Commission has pursued 'market-opening' initiatives in these sectors since the late 1980s, to help produce cheaper, faster, more efficient and more innovative services.
However, such liberalisation has in some cases seen public monopolies – particularly in the electricity and gas markets – replaced by a few dominant private groups, something that is not always beneficial for the consumer.
In the case of postal services, member states are currently implementing a set of 2008 directives aimed at opening up the sector to competition. Yet service providers are concerned that this will make the Universal Service Obligation (USO), which guarantees a frequent and ubiquitous service to all citizens, impossible.
Their fear is that liberalisation will result in new market entrants seizing the most profitable activities – such as business-to-business deliveries in cities – while neglecting customers in more isolated locations, causing incumbent operators to lose the resources necessary to service the most vulnerable.
The postal services legislation features a number of flanking measures to ensure that the provision of universal service remains financially viable in a competitive market, such as direct state subsidies or a compensation fund financed by introducing fees on new service providers or users (see EURACTIV LinksDossier).
Some aspects of public service broadcasting are also regulated under the 'Television Without Frontiers' Directive. Other SGEIs, such as water and waste management, do not have specific legislation but are subject to EU rules on public procurement, state aid and environmental and consumer protection.
A number of SGEIs also fall under the scope of the Directive on Services in the Internal Market – the 'Services Directive'. Telecommunications, transport and audiovisual services are explicitly excluded, along with all non-economic SGIs.
The Services Directive
Proposed by the European Commission on 13 January 2004, the directive aimed to establish a single market for services by removing unfair administrative and economic barriers and creating a level playing field for companies across the EU.
Dubbed the 'Bolkestein Directive' after then-Internal Market Commissioner Frits Bolkestein, it triggered large protests across Europe due to its 'country of origin principle,' under which workers would be employed under the legal arrangements of their own member state.
The article was subsequently renamed 'freedom to provide services' and holds that member states must "ensure free access to and free exercise of a service activity within [their] territory," while allowing them to continue applying their own rules on conditions of employment (see EURACTIV LinksDossier).
The proposal excluded non-economic SGIs, but trade unions also pushed for the removal of SGEIs on the basis that they differ from commercial services and should not abide by the same rules. The European Parliament decided that SGEIs are covered in principle, i.e. if they are not explicitly excluded.
After much wrangling, EU member states adopted the directive on 12 December 2006. It applies to SGEIs only "insofar as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them," in line with the EU Treaties.
For SGEIs covered by the directive – typically postal services, water and waste management, though member-state definitions of SGEIs vary – the provisions on "freedom to provide services" do not apply, whereas those relating to establishment in another member state do.
A deadline of 28 December 2009 was set for all member states to transpose the Services Directive into national law. The deadline was missed by most countries, though the European Commission claimed that many were likely to finish the job before summer 2010 and thus avoid EU infringement procedures.
However, on 24 June 2010 the Commission sent a "reasoned opinion" to 12 member states yet to fully implement the directive: Austria, Belgium, Cyprus, France, Germany, Greece, Ireland, Luxembourg, Portugal, Romania, Slovenia and the UK.
As of November, eight member states still have not implemented the directive and are facing EU infringement procedures. However, according to the Commission, most have indicated that they will transpose the directive into law by the end of the year.
Social services of general interest (SSGIs) are a specific category which covers social security, employment and training services, social housing, child care, long-term care and social assistance services.
In response to evolving social needs and budgetary constraints, EU member states are increasingly developing different ways to organise, provide and finance social services, for example by outsourcing certain services to commercial or non-profit operators.
In November 2007, the Commission published a new communication on SGIs including specific aims for SSGIs – but no legislative proposal. The EU executive then released its first biennial report on social services.
The Commission reiterated last October that there are no plans for new EU legislation on SSGIs, despite ongoing pressure from left-wing politicians and social NGOs claiming that the current rules can lead to significant problems for public authorities and service providers.
According to the EU's commissioner for employment and social affairs, László Andor, the Commission will now focus on ensuring that existing rules are implemented properly and fairly by national authorities, rather than any legislative proposals.
While admitting that "some adjustments might be useful," Andor says there was no need for radical change. "The existing rules offer much more room for manoeuvre in the social sector than people often think," he stated.
Health services in the EU are primarily the responsibility of national governments, with the EU Treaties stating that member states are responsible for the "organisation, financing and delivery of health services and medical care" (Article 152; TFEU).
Yet in some cases, as confirmed by several European Court of Justice (ECJ) rulings, EU citizens may seek health care in other member states, with the cost covered by their own systems.
Health services were excluded from the Services Directive along with SSGIs, despite numerous ECJ rulings showing that they can be considered an economic activity and that EU law can apply.
To provide clarity and legal certainty on the issue and to support cooperation between national health systems, the Commission proposed in July 2008 an EU framework to ensure cross-border access to healthcare services.
The European Parliament adopted the cross-border directive in April 2009, but it has been stalled ever since in the Council of Ministers – where national health ministers have struggled to agree to a deal.
No EU directive for SGIs
After non-economic services were left out of the Services Directive, then-EU Social Affairs Commissioner Vladimír Špidla and an alliance of trade unions, public service providers and the Socialist group in the European Parliament pushed hard for specific EU legislation on SGIs.
However, in November 2007, the Commission scaled down its ambitions and refrained from publishing a directive on SGIs, instead adopting a non-binding communication. The move was met with contempt by the alliance, which had formed a 'public service campaign group' (EURACTIV 21/11/07).
The Commission had signalled on several occasions that it was preparing a framework directive on SGIs, yet according to its president, José Manuel Barroso, the College of Commissioners no longer found it "useful" to publish such a directive.
Its focus switched to a more sectoral approach, whereby existing or pending EU legislation is reviewed to ensure that EU internal market rules clash neither with the provision of SGIs in one member state, nor with privatisation plans in another.
A Protocol instead
The Commission's decision not to issue a legislative proposal followed the establishment of a new 'Protocol' on SGIs in the Lisbon Treaty in October 2007. The Treaty came into force on 1 December 2009, following ratification in the member states.
The Protocol stipulates the need for "a high level of quality, safety and affordability, equal treatment and the promotion of universal access and of user rights," and confirmed that Treaty provisions "do not affect in any way" member states’ control over non-economic SGIs.
The Protocol effectively took the place of a framework directive, though its lack of depth has led to criticism and calls for clarity from service providers – particularly regarding regulatory limits to opening up social services to competition (EURACTIV 01/02/08).
The Lisbon Treaty also established a new "horizontal social clause," which states that the EU should consider social objectives when defining and implementing all policies and activities (Article 9; TFEU). The role of SGEIs such as transport, telecommunications, postal services and gas and electricity is recognised. SGEIs also feature in the EU Charter of Fundamental Rights.
In its 2007 communication, the Commission stated its intention to use the Protocol and its principles "as a benchmark to check the consistency and proportionality of EU policies and initiatives". It launched an interactive information service on SGIs and their relation to EU law in January 2008.
As there is no specific EU legal framework for SGIs, conflicts of interest or breaches of competition law are dealt with on an ad hoc basis by the EU's law institution, the European Court of Justice.
The future: No legislative measures?
Following the 2007 communication and entry into force of the Lisbon Treaty, the Commission has made clear that no new legislative frameworks will be proposed either for SGEIs or non-economic SGIs. The Protocol is therefore the legal basis for SGIs in the EU.
In October 2009, with the economic crisis in full swing across the Union, Commission President José Manuel Barroso tasked former European commissioner Mario Monti with preparing a report on the future of the single market.
The report also came in the context of the EU's new strategy for growth and jobs, 'Europe 2020', which was unveiled in February 2010 as the successor to the largely unsuccessful Lisbon Strategy of the previous decade.
Monti's report led to the Commission's 'Single Market Act' in October 2010 – 50 proposals aimed at rekindling the internal market, one of which is to improve public services. The Commission will therefore adopt a new communication and a series of measures on SGIs in the course of 2011 – though no legislative proposals.
The EU executive plans to provide public authorities with a 'tool-kit' covering all relevant issues surrounding SGIs, such as financing, public procurement and cooperation between different authorities. It also pledged to better evaluate and compare the quality of SGIs across the Union (see Single Market Act, pages 20-21).
Providers of social services of general interest (SSGIs) have been calling for more urgent change, however. On 26-27 October 2010, the Belgian EU Presidency hosted the 3rd Forum on Social Services of General Interest, attended by some 300 delegates, mostly representingorganisations responsible for delivering social services in the member states.
Many said they wanted the EU to pay more attention to guaranteeing the high quality of SSGIs. An alliance of eight associations asked the Commission to examine whether these services could be exempted from public procurement rules.
Delegates also discussed a voluntary European quality framework for social services, recently prepared by the Social Protection Committee, which brings together national experts from the EU member states. Employment and social affairs ministers approved the non-binding framework on 6 December 2010.
Meanwhile, the European Parliament is preparing to debate the future of social services next year. A series of recommendations will be drawn up and debated by MEPs in the Parliament's employment and social affairs committee during the first half of 2011.